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Apple on Wednesday conceded that it sold 16% fewer iPads in the March quarter than in the same period the year before, fulfilling analysts' expectations -- in spades -- that the company's tablet sales have slowed.

Wall Street had expected significantly larger iPad numbers, but still figured Apple would record a slight downturn.

Instead, Apple did much worse than analysts anticipated: The company sold 16.4 million iPads in the quarter, down more than 3 million compared to the first three months of 2013.

CEO Tim Cook tried to downplay the downturn yesterday. "iPad sales came in at the high end of our expectations," he said (emphasis in original). He blamed the disconnect between Apple's internal estimates and those of Wall Street on the disparity between what was in the pipeline last year and this year.

"In the March quarter last year, we significantly increased iPad channel inventory, while this year we significantly reduced it," Cook said. "We ended the December quarter last year with a substantial backlog with iPad Mini that was subsequently shipped in the March quarter, whereas we ended the December quarter this year near supply-demand balance."

If those in-pipeline iPads were discounted, claimed Cook, the decline for 2014's March quarter was only 3%.

"I completely buy Tim's explanation of the gap," said Van Baker, an analyst with Gartner, in an interview Wednesday after Apple's earnings call. "But still, if you look at sell-through, it's been down and down. That's bad news for the iPad."

Cook refused to look on the dark side of things, saying he remains bullish on the iPad. "We continue to believe that the tablet market will surpass the PC market in size within the next few years, and we believe that Apple will be a major beneficiary of this trend," he said.

He also cited a string of iPad statistics to bolster his view, saying that the iPad has been Apple's fastest-selling product line ever: At 210 million tablets in four years, the company sold was twice as many iPads as it did iPhones in the latter's first 48 months, seven times what it booked in iPod sales in the same timeframe.

Carolina Milanesi, chief of research at Kantar Worldpanel ComTech, keyed on Cook's comments as she digested the iPad numbers, and like other analysts before the earnings call, argued that the rapid rise of the iPad was to blame for slower sales now.

"I think that's key to understanding [what's happening now]," said Milanesi. "The uptake was really, really sharp. Everyone thought it was going to take much longer."

The iPad's initial growth -- bolstered, Milanesi pointed out, by Apple's first-mover position and a resulting dominance early in the tablet wars -- of triple digits through 2011 and into early 2012 was clearly unsustainable.

Apple's problem, as Milanesi sees it, is what to do going forward, especially if, as most expect, the company unveils one or more larger-screen iPhones this fall.

Ben Thompson, an independent analyst whose Stratechery website has become a must-read for many in the technology industry, agreed. "Even giving Cook the benefit of the doubt (and you should, in this case), there's no question the iPad is flat lining," Thompson wrote this morning in a note to paying subscribers. "It's fair to wonder how much a larger-screen iPhone will cannibalize sales going forward."

The iPad is already eating its own, Apple's sales data hinted yesterday. The iPad's ASP (average selling price) for the March quarter climbed by $25 to $465, a 6% increase compared to the quarter that ended Dec. 31, 2013. That seemed to show a lean toward the more expensive iPad Air, and away from the cheaper iPad Mini. The latter is, analysts have said, most at risk from cannibalization by iPhones with larger screens.

But for all the doom and gloom about the iPad's future, Milanesi asserted that Apple is not the only tablet maker dealing with a slowdown. According to researcher IDC, tablet growth will slow to about 19% this year, dramatically down from 2013's 52% rate. "This is an industry issue," Milanesi said.

And Apple has the luxury of flexibility in how it moves forward with the iPad because of its industry-leading ASP, the volume of its sales -- even if that volume has shrunk -- and the profit margins it makes on those sales.

"The question now is 'What else are they going to do?'" Milanesi said.

Indeed.

iPad sales declined year-over-year in the March quarter, the second time Apple's seen growth flag but consistent with a significant slowdown in the last seven quarters compared to extreme increases in 2011 and early 2012. (Data: Apple.)